Billionaire investor Leon Cooperman stated Tuesday both surging oil costs or the Federal Reserve’s aggressive tightening will tip the U.S. economic system right into a recession subsequent 12 months, and that would imply a 40% drop for the S & P 500 from peak to trough. “I think we are going to have a recession and profit is going to drop. In a typical recession, profit drops 20%,” Cooperman stated on CNBC’s “Squawk Box.” “I think the price of oil or the Fed will push us into a recession some time next year. I think there’s too much liquidity in the system to experience a recession this year.” The chair and CEO of the Omega Family Office stated he stays a long-term bear due to the “very inappropriate” fiscal and financial insurance policies. He stated he believes the unprecedented stimulus has pulled demand ahead and created a synthetic scenario within the economic system. The veteran investor expects low returns could possibly be the norm for the foreseeable future because the central financial institution continues to battle surging costs. “I’m more invested than I want to be, so I’ve been a seller on strength and not a buyer on weakness. My basic viewpoint is that the 4,800 of the S & P is likely to be a high for quite some time. I think we are going to a long period of low returns as we try to right this ship,” Cooperman stated. The S & P 500 dropped almost 4% Monday to hit a brand new low for the 12 months at 3,749.63. The benchmark is now off about 21% from its report, again in bear market territory after buying and selling there briefly on an intraday foundation about three weeks in the past. “If I’m right that we wind up in a recession, yes, but it won’t happen this year,” Cooperman stated when requested if the S & P 500 will drop 40% if a recession arrives. “I think the low this year is probably not materially below where we are. … I think being conservative, being cautious is the right approach. … I think the bottom is not in yet.”
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